Finance & Revenue

On Monday July 25th, the Comptroller told the LBB:

• Texas is in a better position than other energy producing states
• Texas has an unspent surplus of $4 billion from 2015
• Texas is NOT in a recession
• Texas has positive job growth
• June 2015- June 2015 Texas job growth was 1.4%, below the 1.7% national average

Houston Chronicle | Comptroller: Texas lags nation in job growth

Galveston County  tax collector-assessor Cheryl Johnson recommends the following legislative fixes:

• Requiring the state comptroller’s office to sign off on industrial property values.
• Establishing a state-financed legal defense fund for counties facing appraisal lawsuits.

Travis County Chief Appraiser Marya Crigler emphasizes that some form of sales price disclosure would make the appraisal process more efficient and cost-effective.

Watchdog.org | Commercial lawsuits blow back on Texas taxpayers

• Taxpayers pay for the legal fees of the appraisal districts defending its commercial appraisals.
• Taxpayers cover the revenue hit to the taxing jurisdictions when lower commercial appraisals reduce revenue.
• Sen. Kelly Hancock “speculated that Texas counties punish homeowners with inflated appraisals to offset “lost” commercial tax revenue.”
• What does this look like in big Texas counties?
  • Austin
    • ​413 lawsuits
    • $11.3 billion in values are being contested
    • Travis County Appraisal District boosted its legal budget by 20% to cover challenges
  • San Antonio
    • ​$19.4 billion in appraisal disputes in the last year
  • Texas wide
    • 4,000 appraisal challenges in the last year
    • reducing taxable values on average 7.5%

Watchdog.org | Commercial lawsuits blow back on Texas taxpayers

Which Texas city offered a developer a del via a TIRZ? Galveston via the The Galveston Island Redevelopment Authority

What development was promised? Beachtown, which by 2013 was to include:

• a hotel
• 306 single-family houses
• 200 multifamily units
• 250 units of retirement housing

Was the development completed? No

What facts does the lawsuit highlight?

• Secret negotiations, secret meetings in violation of the Open Meetings Act
• Allegations that the developer forced replacement of commissioners on the Galveston Island Redevelopment Authority
• A contractual gag order on local officials to not discuss the deal

Houston Chronicle | Galveston development project shrouded in secrecy despite public investment

The State: Alabama

The legislative mechanism: A special session of the Legislature for the “specific task of approving a lottery to fund “essential services.”

The revenue shortfall source: Medicaid. Medicaid has doubled in size in the last decade.

The beneficiaries: Rural hospitals whose major patient pool is from Medicaid 

Does Alabama have a lottery currently? No, Alabama is 1 of 6 states without a lottery.

Yellow Hammer News | IT’S OFFICIAL: Bentley urges legislature to approve lottery to fund Medicaid growth

LBB Issued new Guidance to Agencies on their Legislative Appropriation Requests (LARs). The new LAR items:

• New: Budget Overview Schedule. No new data, just a new format with a concise overview
• New: Program-Level Request Schedule. Contrasts previous bienium expenditures with request
• New: Summary of Behavioral Health Funding Schedule.  List behavioral health or substance abuse services expenditures
• Deleted: Budgetary Impacts Related to Federal Health Care Reform and the Budget Control Act 
• Administrator’s Statement concerning the mandated 4% cut
• Exceptional Item Request Schedule 4.A: Information Technology.  Specifically if there is an IT contract or contracts with outside entities from amounts in excess of $50,000. 
• Ten Percent Biennial Base Reduction Options. reduction options should also include estimates of any losses in revenue, including Federal Funds, as part of the agency’s impact statement within the schedule.
• Transferred Programs.  Agencies receiving a transferred program or function should not re-enter historical expenditures for a transferred program 
• Schedule 3.A. Strategy Request. More specifics required to justify a biennial change
• Centralized Accounting and Payroll/Personnel System (CAPPS) –  include all ongoing costs to support and maintain their systems.

LARs are due to LBB in August. 

LBB | Updated 2018-19 agency CAPPS listing on page 45 of the LAR Instructions
 

6 states have enacted laws to support fantasy sports in 2016:

• Colorado
• Missouri
• Mississippi
• Tennessee
• Indiana
• Virginia

21 states did not formally legalize fantasy sports, including: Alabama, Arizona, Connecticut, Delaware, Florida, Georgia, Hawaii, Iowa, Kentucky, Louisiana, Maryland, Minnesota, Nebraska, New Mexico, Oklahoma, Rhode Island, South Carolina, Vermont, Washington, West Virginia, Wisconsin.

7 states could still act on fantasy sports laws in 2016, including: California, New Jersey, Pennsylvania, Illinois, Massachusetts, Michigan, New York (awaiting governor’s signature)

AP | AT LEAST 6 STATES ADOPT FANTASY SPORTS LAWS; 21 OTHERS DON’T

How did the Permanent School Fund add $98 million in the past 6 months? A 3x increase in Oil & gas leases for Texas’ publicly held land 

How many acres of state land have been leased in the last 6 months? 13,000+ acres

What does this mean for the Permanent School Fund? $98 million in revenue

Average price per acre: $7,365, compared to around $2,500 per acre in January and about $1,700 in August 2015

Statesman | Texas oil and gas leases jump despite oil price slump

• Pension Debt per household
  • Texas is #33 with per household pension debt of $27,343
  • Alaska is #1 with per household pension debt of $113,137
  • California is #3 with per household pension debt of $77,700
• Pension Debt per Capita
  • Texas #42 at $9,235
  • California #4 at $25,325
  • Alaska is #1 at $38,251
• Actuarial Funded Ratios
  • Texas #20 at 81.6%
  • California #24 at 79.4%
  • D.C. #1 at 108.3%

Stanford Institute for Economic Policy | Pension Tracker

Which public pension system is the world’s largest? Japan’s The Government Pension Investment Fund

The parameters for its socially responisble investment: environmental, social and corporate governance factors

Wall Street Journal | Japan’s Public Pension Fund Looking for Socially Responsible Stocks

Harvard Business Review tells us that public pensions perform better when these charactersitics exist:

• Pensions are free from politics & able to focus on maximum returns
• Avoid poor investment choices by public pensions that are linked to:
  • elected official interference related to local economic devleopment
  • elected official interference related to compensation or recruitment of talented staff
• Strong governance model protects pensions from political whims that diminish returns 

Harvard Business Review | Public Pension Funds Perform Better When They Keep Politics at Bay

Why are we concerned about legal issues related to the sharing economy

• Within 4 years, 40% of all American workers will be independent contractors

The top legal issues related to sharing economy:

• Liability
•  Insurance coverage- whose responsible for it?
• Are people engaged in sharing economy employees or indpendent contractors?
• Does the sharing economy, using an app, trigger products liability?

California Bar Journal | On the road to a gig economy, litigators take the wheel

The State: California

The tax cut: Removing the sales tax to cover newspapers and other good

How long had the tax on newspapers been in place? 25 years

Annual tax revenue on subscriptions: $50 million

Sacramento Bee | After 25 years of taxation, California newspapers on verge of tax break

Which pension system is diversting from guns? New York City Pension Fund

What divestment is occuring? A divestment of 3 retailers that sell guns:

• Dick’s Sporting Goods
• Cabela’s
•  Big 5 Sporting Goods

How big is the New York City Pension Fund? $59 billion

Who voted to divest from gun retailers? board of trustees of the New York City Pension Fund

What do the activists say? “We will no longer do business with companies that fund the deaths of our family members and friends.”

New York Times | Dealb%k| New York City Pension Fund to Divest Itself of Gun Retailer Stock

Which pension merged the 13th check fund to the main pension fund? Wayne County Michigan

Did eliminating the 13th check impact pension soundness? Yes, by rolling the 13th check fund into the pension fund pension funding levels improved by 9% within 1 year

Detroit Free Press | Wayne County pension system funding sees improvement

The contract bidder: Texas Precious Metals

The company dates to: 1898

Location: Shiner, Texas

The proposed depository: 46,000 square feet

Victoria Advocate | Shiner Company vies for state depository contract

Where is there a legal fight over the release of pension data? Nevada

What information is sought? Names of employees are taking a pension and how much the employee receive

What type of group wants access to pension data in Nevada? A conservative think tank

What type of information did the pension system release to the conservative think tank? Pension payments by redacted social security number. The pension system believes it complied. The think tank wants the pension system to link the social security numbers to names.

Nevada Appeal | Group wants judge to force release of Nevada pension data

Michigan is funding private schools with $2.5 million in its education budget for complying with mandates like safety drills.

Opponents say the $2.5 million in funding violates Michigan’s constitutional ban on subsidizing private schools.

Detroit News | Snyder signs education budget with private school aid

Governing | $2.5 million 

• By 2025 $4.3 trillion in annual GDP in 2025 by advancing women’s equality
• Texas GDP can increase by up to 10% by 2025 with more women employment equity

 McKinsey Global Institute | The power of parity: Advancing women’s equality in the United States

The estimated lower revenues? $10 billion lower oil and gas revenues in Texas for the 2017 Legislature

The exemptions to the Governor, Lt. Governor, and Speaker’s call for 4% cut in agency budgets:

• border security
• child protective services-  foster care & adoption subsidies
• Medicaid programs
• the Children’s Health Insurance Program
• permanency care assistance
• mandatory school funding

Houston Chronicle | Call for state budget cuts includes plenty of exemptions

Where: Jacksonville FL

How does the sales tax for pensions work? 1/2 cent sales tax to defer city pension contributions until 2030

What benefits are there to city revenues?

• From 2018 through 2034, the city would spend $857 million less on contributions to its three pension plans
• From 2035 to 2049, the city would spend $2.37 billion more in pension contributions with estimated 1/2 cent sales tax increase revenues being $2.5 billion from 2031 to 2049
• For accounting purposes, the City could use the future sales tax revenue on the current books to offset liabilities

Alternatives to the sales tax increase? property tax increase

Jacksonville | Report on proposed pension fix gives ammunition to supporters and opponents of sales tax

#1 Benefit of the new Rangers Stadium proposal: Climate Control

Economic Support for new Rangers Stadium: City of Arlington is paying off its portion of the new Cowboys stadium 14 years early

Is the Ranger deal as good as the Cowboy deal financially for Arlington? No. 

• The ticket and parking taxes that helped Arlington with its payoff of the Cowboys stadium will go into the pockets of the Rangers
• The Cowboys stadium packed its ticket sales with Super Bowls, the NCAA Final Four, college football championship games, boxing matches, international soccer matches, motocross, concerts …that’s what paid the bills.

Market Watch opinion | $1 billion ballpark proposal in Texas withers in the heat

• 12th highest combined sales tax in Texas at 8.17%
• 1st highest combined sales tax is Louisiana at 9.98%
• 10th highest combined sales tax is California at 8.48%
• 9th highest combined sales tax is New York at 8.49%
• 33rd highest combined sales tax is Pennsylvania at 6.34%
• 30th highest combined sales tax is Florida at 6.66%
• 19th highest combined sales tax is Ohio at 7.14%

Tax Foundation | How high are sales taxes in your state?

Which state Legislature is moving a new music production tax credit? New York

The tax credit’s details:

• 25% tax break for eligible music-production-related costs downstate
• 35% tax credit for upstate music production
• 75% of the project must be made in New York
• Funded with $25 Million per year

What costs are included in the Tax Credit calculation?

• below-the-line fees like:
  • studio rental fees
  • mixing
  • session-musician salaries
  • engineering and mastering services

Why did New York revisit a music production tax credit?

• New York lost the Grammy’s to Los Angeles
• 50% reduction in New York based music production since 1999

Crain’s New York Business | State legislature passes music production tax credit

• #1 in outstanding debt: Business & Economic Development
• #2 in outstanding state debt: Education
• $41 billion in outstanding state bonds in Texas
• $4 billion in biennial appropriation for debt service

LBB Texas State Debt

Which state representative & senator: James Frank & Donna Campbell

The 2017 legislative idea: restrict wind energy tax abatements near military facilities

What’s the motivation? 

• 2 wind farm projects are seen as a threat to pilot safety at Sheppard Air Force Base
• If the Air Force moves operations, that’s an estimated $750 million loss 

Times Record News | Rep. James Frank to file wind farm-related proposal

How does the proposed 50-50 stadium in Arlington for the Rangers become a 80% taxpayer funded stadium?

• The 50-50 agreement includes tax increases
• An ‘admissions and parking tax’ of up to:
  • 10% percent surcharge on event tickets
  •  $3 additional surcharge on parking
• ​The Rangers can use their portion of the admissions and parking tax revenue to offset their construction costs, reducing their 50%

Breitbart | Analysis Shows Texas Taxpayers May Be Stuck with 80 Percent of Costs for New Rangers Park

Which local government is considering less costly pension reforms? Philadelphia Board of Pensions

What’s Philadelphia’s end game? To convince 30,000 retirees to switch to a less lucrative & less costly benefits plan

What’s the liability of Phildelphia’s pensions? $10.8 billion liability with $4.9 billion funded

Didn’t Phildelphia try to buy out pensions? Yes a buy out was considered but it was determined that it would cost the pension system more than to retain the pensions

So what’s on the table to encourage a switch from a costly pension plan to a less costly pension plan?

• a one time partial payment to switch pension plan
• the partial payment would equal 50% the difference in benefits from the more costly plan to the less costly pension plan

Philly.com | Philly Pensions Board considers a less costly plan for retirees

The Fort Worth Employees’ Retirement Fund lost money in its investments.

What will it take to overcome the investment loss?

• additional 5 percent in payroll contribution
• currently 30% of Ft. Worth’s payroll goes to its pension

WFAA | Fort Worth’s employee pension problems grow worse

• Pensions in Houston are “a mess”- take a look:
  • 31% of Houston’s payroll costs go to pension costs
  • pension liability is $5.6 billion
• Support lower cost-of-living adjustments
• Support higher retirement ages
• Keep on the table for consideration moving new hires to 401K style plans because:
  •  We can’t predict pension investments in the future
  • Businesses abandoned pensions for 401K systems
• If Houston won’t fix it, Austin must

Houston Chronicle Editorial | Editorial: Pension tension In critical city employee pensions talks, no solution should be off the table

A Tyler Morning Telegraph Editorial  makes these points in opposition to a Texas soda tax:

• its the worst tax as it unfairly hits the poor
• studies show that soda taxes  have little or no effect on health
• using revenues for education means the poor pay the pre-K costs for the middle class

Tyler Morning Telegraph | Soda tax would hurt the poor

• $11.64 billion in state and local taxes are paid nationally each year by undocumented immigrants
• Texas #2 for state & local taxe revenue of $1.5 billion paid by undocumented immigrants 
• California #1 at $3.17 billion per year in tax revenue from undocumented immigrants

Texas is:

• 9th best economy
• 2nd for GDP growth
• Top in Exports, tied with LA and WA for most exports per capita
• 14 years Texas has led the nation in exports
• 12 years Texas has been the top state for business
• 20th in innovation potential
• 2nd in the nation for the number of tech jobs
• More than 585,000 Texas tech jobs

Southeast Texas Record | Texas has ninth-best economy among U.S. states, WalletHub analysis reports

How the soda tax win in Philadelphia was messaged:  A win for education. A win for the coalition of educators, parents, and rec center volunteers

The billionaires/business types supporting the soda tax:

• Former New York Mayor Michael Bloomberg
• Texas billionaires John and Laura Arnold

The impending legal fight: local beverage bottling businessman is filing suit

Dallas Morning News | How Texans helped Philadelphia become first U.S. city with soda tax

The Texas Supreme Court Opinion: Southwest Roaylties Inc. v. Glenn Hegar

How the ruling saved Texas Billions: 

• The Texas Supreme Court agreed with lower courts that Southwest Royalties did not qualify for a sales tax exemption on its products and services used for oil and gas exploration and production
• Southwest Royalties wanted a $500,000 refund
• The Comptroller’s Office indicated the total cost would be $4 billion for all refunds paid

What the lawyers say after the ruling:

• Issue isn’t closed.
• Other equipment may qualify for the sales tax exemption
  • If the equipment can be linked to processing, the exemption lives

Houston Chronicle | Sales tax ruling on oil field equipment saves Texas billions

What local government created a commission to oversee pensions? Grand Trverse County Commissioners

What’s the goal of the pension advisory board?  To prevent and correct pension debt & improve transperancy in the pension plans

What do I need to know about the pension advisory board?

• will meet on a quarterly basis
• will provide regular reports
• membership includes:
  •  commissioners’ chair or vice chair,
  • county administrator,
  • finance director,
  • treasurer
  • 3 citizens with a financial or investment background

Traverse City Record Eagle | Commissioners create pension board

What’s Pennsylvania’s 2016 pension reform? A Stacked Hybrid Plan

What’s a Stacked Hybrid Pension?

• Applies to all new employees- state employees & public school teachers
  • baseline pension
  • traditional formula of years of service x 2% of final average salary
  • converts to a (401)k-style plan for any income earned over $50,000-per-year, & for all income after 25 years of service
  • For new enrollees, the the 401(k) threshold income would be adjusted up by 1%
  • 7% employee contribution
  • 4% state contribution on compensation above the 401(k) income threshold
• No impact to current employees or teachers
• Excludes State law enforcement

What’s the saving to the state with this pension reform plan? $10 billion over 30 years

How’s the reform progressing? Easily passed the House 136 to 59

What do supporters say? This reform will ” save the debt-plagued public pension systems billions over the coming three decades”

Pennsylvania HB 1499

Herald Mail Media | Pa. House sends public pension overhaul to Senate

The Court: 3rd Court of Appeals

The question: Is Austin’s billboard tax permissible?

The Court’s answer: No.  

The logic of the 3rd Court of Appeals:

• The TX Constitution limits local taxes to no more than 1/2 of the state’s tax
• The state has no billboard tax
• A federal judge had already said Austin’s billboard fee is a tax
• Therefore, Austin’s billboard tax is impermissible

What does this mean for Austin? The 3rd Court of Appeals accepted the billboard company’s expert that said the true cost of Austin’s billboard regulation is $115 per billboard.

What does this mean for 2017? Can we say a permissible billboard tax for local governments?

Statesman | Appeals court: Austin must refund $200,000 for improper billboard fee

Which state: Colorado

The key phrases from Governor Hickenlooper:

• Smart regulation to protect consumers, but with a light-touch that does not stifle innovation
• Hope Colorado will be an incubator for the many innovative fantasy sports companies
• Hope the state can become a real home for this emerging sector of the tech industry

Fan Duel | Colorado Legislature Passes Fantasy Sport Bill

Texas Public Radio looks at Philadelphia’s proposed Sugar Tax. 5 Questions Answered:

• What’s included in the proposed new tax?
  • ​1.5 cents-per-ounce on sugar and artifically sweetened soda
  • revnue dedicated to education
• Why is this a big deal?
  • ​precedent setting, other cities have failed to pass a soda tax, only Berkeley has an enacted soda tax
• What’s the evidence that taxing sugary drinks would lead people to drink less of them?
  • ​“its intuitive” says one economist
  • In 2014 immediately after a soda tax in Mexico, sales declined (sales have since rebounded)
• Who supports the proposed tax?
  • ​Philadelphia Mayor says its about an industry that makes a lot of money on the backs of poor people
  • religious leaders &  faith organizations
  • teachers
  • business owners
  • public health advocates
• Who opposes the proposed tax?
  • ​a coalition called  No Philly Grocery Tax
  • teamsters

The Court: New Jersey Supreme Court

The decision:  No contractual right to pension cost of living adjustments 

The response from Moody’s credit service ratings: ” eliminates a major threat to the state’s fiscal stability”

How can this impact other states: Federal Appellate Courts have upheld the contractual COLA payments

CNBC | New Jersey top court sides with state in high-stakes pension case

The trend that just keeps moving- daily fantasy sports regulations.

Which state is immenently passing statewide regulation of daily fantasy sports? New York

The key elements of the deal:

• consumer protections
• registration fee for daily fantasy sports providers of $150,000
• 15% tax to generate $5 million/annually

Lower Hudson | Daily fantasy sports to get Legislature approval

New York Times | Committee in Albany Reaches Deal to Legalize Daily Fantasy Sports

Ray Perryman group analyzed the economic impact of a Texas Supreme Court ruling in favor of Southwest Royalties. 

The informed intel:

• A ruling that allows the sales tax exemption for items used in the processing of oil and gas is consistent with Texas law
• Will pay dividends to the state for decades
  • Within 5 years, total state and local tax gains will exceed losses
  • Tax gains will be due to increased exploration due to lower costs
• The short term revenue hit to the state is lower than projected at $2.4 Billion

Gilmer Mirror | Study by Perryman Group Finds Texas Supreme Court Ruling in Favor of Southwest Royalties Would Provide Substantial Long-Term Economic Benefits to State

The new president of the McKinney Economic Development Corporation:

• Darrell Auterson
• begins post on July 1st 2016
• 35 years experience
• 1st economic development gig in Texas
•  president and CEO of the York County Economic Alliance in York County, Pennsylvania
  • led $2 billion in development & 14,000 jobs
• previous economic development positions in:
  • Indiana
  • Illinois
  • North Carolina
  • California
• board of directors for the International Economic Development Council
• B.S. in urban regional studies from Indiana State University

Community Impact Newspaper | McKinney Economic Development Corporation welcomes new president

TPPF calls for pensions that have state oversight to be returned to full local control in 2017.

TPPF Key Points:

• Being unable to make “good government” changes locally to the pensions has caused financial harm
  • a total of $8.7 billion in total pension liabilities 
  • 9 of the 13 systems have funded ratios below 80%
    • Ft. Worth Employees Retirement Fund’s 55.7 year amoritization period
    • Dallas Police & Fire Pension System – Combined has the most unfunded liabilities at $2.1 billion 
• TPPF relies on Pension Review Board data 
• TPPF highlights Moody’s downgrading of Houston’s credit rating as a direct result of Houston’s pensions 

TPPF target pensions: 

• Austin Employees’ Retirement Fund
• Austin Fire Fighters Relief and Retirement
• Austin Police Retirement System
• Dallas Police & Fire Pension System – Combined
• Dallas Police & Fire Pension System – Supplemental
• El Paso Firemen’s Pension Fund
• El Paso Police Pension Fund
• Ft. Worth Employees’ Retirement Fund
• Galveston Employees’ Retirement Plan for Police
• Houston Firefighters’ Relief and Retirement Fund
• Houston Municipal Employees Pension Systems
• Houston Police Officers’ Pension System
• San Antonio Fire and Police Pension Fund

TPPF | Restoring Local Control of State-Governed Pension Plans 

Annual sin tax revenue:

• Pennsylvania $2.7 billion
  • $1 billion of which was tobacco taxes
• New York $2.65 billion
• Texas $2.51 billion
  • $1.446 billion of which was tobacco taxes
• 8 other states exceed $1 billion:
  • Nevada ($1.05 B)
  • Indiana ($1.15 B)
  • Illinois ($1.81 B)
  • Ohio ($1.34 B)
  • Michigan ($1.35 B)
  • New Jersey ($1.14 B)
  • Florida ($1.02 B)
  • California ($1.2 B)

Included in sin tax calculations are:

• tobacco laxes
• alcoholic beverage taxes
• gaming: casinos, racinos, pari-mutual racing

Value Walk | Mapping Sin Tax Revenues Across America [MAP]

Beekeepers in Wyoming may soon be on par with farmers and ranchers.

The Wyoming Legislature is considering adding beekeeping to the definition of agricultural lands to allow beekpeepers the same tax breaks as farmers and ranchers.

Casper Star Tribune | Wyoming Legislature considers tax breaks for beekeepers  

New York is moving forward to dissolve all local development corporations, because:

• Not enough oversight of local development corporations
• Several Districts had leader convicted of corrpution crimes
• The functions of the local development coporations are best handled by local governments

ABC 13 WHAM | County legislature approves move to dissolve LDCs

•  $3.7 billion in FY16 franchise tax revenues
  • Above 2015 revenue estimates
• March, April, May 2016 sales tax revenues are down 1%
  • Caveat: May 2015 sales tax revenues were unusually high, the 2nd highest in history
• $383.7 million in motor vehicle sales and rental tax revenue
  • 61% increase over May 2015
• $287.1 million in motor fuels tax revenue, down 0.9% from May 2015
• $148.4 million in oil and natural gas production tax revenue, down 45.6% from May 2015

Comptroller Hegar | Franchise Tax Collections Ahead of Projections; State Sales Tax Revenue Totaled $2.4 Billion in May

• #45 Texas national rank
• $2.40 is Texas tas rate per gallon
• #1 state is Washington at a rate of $33.54
• $2.00 per gallon tax in Missouri is the nation’s lowest.

Tax Foundation | How High Are Taxes on Distilled Spirits in Your State?

WHO: Governor Mark Dayton (D-MN)

VETOED PENSION CUTS THAT WOULD:

• cut cost of living adjustments
• for retirees in Minnesota’s teacher retirement system & state employee retirement system

THE TEACHER COST OF LIVING CUT: Total cost of living adjustment would have been 1%, down from 2%

STATE EMPLOYEE COST OF LIVING CUT: Total cost of living adjustment would have been 1.75%, down from 2%

OTHER PENSION REFORMS VETOED IN THE BILL:

• cut the teachers plan’s long-term assumed rate of return to 8% from 8.75%

THE REASON FOR THE VETO: Give and take. If you ask retirees to give up something, the other side, the employer, side has to also take responsibility to lessen the pension liabilities, and the bill did not do that.

Business Insurance | Governor vetoes bill to cut pension cost of living increases

What’s the drafting error forcing a special session? The use of “and” instead of “or” in a tax bill.

What’s the impact of the use of “and” in the tax bill? “And” limits the taxpayers taht will pay the tax.

Will the drafting error reduce state revenues? Yes 

• The drafting error affects paper pull-tabs in bingo halls by eliminating a tax on places that sell pull-tabs under a broader definition of a bingo hall.
• The cost: $101M.
• The reveue is necessary for the state to pay its contribution to the new Vikings Stadium

MINNPOST | Dayton signs budget bill, lays out terms for special session

Which city budget is re-routing special district funds? Houston

Which special district funds are heading into Houston’s general fund? TIRZ funds (Tax Increment Reinvestment Zones)

What are the PROs of re-routing TIRZ funds to the general fund?

• The $19.2 million helps fill a city budget gap
• TIRZ opponetns say the districts do not pay the fair share of the City’s operating costs, this funding change restructures TIRZ funding to ensure that the disricts pay their fair share of Houston’s operating costs

What are the CONs of re-routing TIRZ funds to a city’s general fund?

• delay in TIRZ capital projects
• whether or not the TIRZ funds should be exempt from the city’s revenue cap
  • The city is treating the funds as exempt
  •  1 TIRZ says its funds fall within the cap

Houston Press | Potential Problems With Mayor Turner’s First City Budget

Appropriations and Public Education will examine:

• Additional Interim Charge 1:
  • The impact to school districts when the Additional State Aid for Tax Relief ends on 9/1/17
• Additional Interim Charge 2:
  • The use of local property taxes to fund public education
  • The effect on educational quality
  • The effect on Texas taxpayers
  • Recommend ways to reverse increasing reliance on recapture payments

What Speaker Straus said:

• “It’s important that we keep local tax dollars in local districts as much as possible, while still ensuring that all students have access to quality public schools”
• “The Supreme Court made clear that our school finance system can be improved,” Speaker Straus said. “The House will continue working toward better schools for our students and a more efficient funding system for taxpayers.”
• Speaker Straus also honed in on this line from the Texas Suprme Court school fiancne opinion:
  • The Texas school finance system is “undeniably imperfect, with immense room for improvement.”

Speaker Straus | STRAUS INSTRUCTS HOUSE TO CONSIDER ADDITIONAL SCHOOL FUNDING REFORMS

Can a higher education institution enter into a contract with a business entity in which an institution’s board member, or family, has an interest?  NO

What light does Chairman Jane Nelson’s opinion request shed? That Nelson’s Senate Bill 20 (2015) prohibits these contracts

What‘s the hoopla about to cause an attorney general opinion to be required?

• Whether Senate Bill 20’s changes to chapter 2261 of the Government Code conflict with section 51.923(d), Education Code, which says these contracts are A-OK.
• This statutory conflict is between SB 20’s prohibitions on contracting power and the Education Code’s granting contracting power
• The Attorney General finds SB 20’s language specific and express 
  • Specific & Express are important because specific statutes trump general statutes

What could you do to get the opposite result?

• Make the Education Code more specific
• Remove the specificity and express refeences to higher education in chapter 2261, Government Code

KP-0093

Houston’s municipal pension board ousted its fund director. The key intel:

• Houston Municipal Pension Board will have to pay out the director’s contract
• The Houston Municipal Pension is the weakest of Houston’s pensions funds
  • 52% funded for its liabilities
• The replacement- The person responsible for the 2001 legislative reforms to the municipal pension that are alleged to have blown the budget

What does this mean for pension reform in Houston?

• Mayor Turner wants “a deal by the end of the year that will reduce the city’s large and growing pension bill”
• The Municipal pension board is joining  reform talk with the police and firefighter pensions

Houston Chronicle | Houston pension fund’s leader ousted without explanation

• $1 Billion stadium
• Unanimous City Council Vote
• $500 million package deal for voters to approve on 11/8/2016, including:
  • 1/2 cent sales tax 
  • 2% hotel tax 
  • 5% rental car tax
• 56 Stadium Supporters registered support at Arlington City Council meeting
• $77 million, the annual economic loss to Arlington if the Rangers would leave
• $200 million greater cost to Arlington than for AT&T stadium
• 49 acres of parking space to be purchased by City Council and leased back to the Rangers

Dallas Morning News | Unanimous: Arlington City Council signs off on $1 billion Texas Rangers stadium deal

Which state is reforming its open records laws? Massachusettes

What reforms is Massachusettes including?

• state, cities, and towns will pay lawyer fees if a court finds that they inappropriately withheld public records
• require digital responses
• eliminates exorbitant fees on open records document production
• Reforms timelines to ensure specific deadlines for producing documents
• Public Pension records become public information

Boston Globe | Legislature poised to pass public records measure

What entity is estimating the impact on the Texas economy from lower oil prices? Dallas Federal Reserve senior economist Keith Phillips

What did the Dallas Federal Reserve say the chance of an economic downturn in Texas? Only about 15%

What positive economic factors did the Fed point to to be “very confident that it continues in an expansion [of the Texas economy]?”

• Austin and Dallas are still growing
• rebound in hiring by high-tech and other white-collar firms
• a rebound in hiring by high-tech and other white-collar firms

Statesman |  Dallas Fed: Texas unlikely to see recession, despite energy woes

Which state is considering Super Bowl tax breaks? Minnesota

What are the tax breaks?

• sales tax break for tickets
• sales tax break for parking
• event reimbursement up to $1,600,000

Minnesota Senate Bill H.F. 848 Omnibus tax bill

How much funding have pension put toward funds that invest in litigation lending?

• $1.4 billion in commitments from Michigan Municipal Employees’ Retirement System & Employees Retirement System of Texas

Do these funds disclose the rate of return? No

Wall Street Journal | Litigation Financing Attracts New Set of Investors

 Idaho is the 16th state to  prohibit daily fantasy sports.

Idaho Attorney General pointed to Idaho’s  definition of gambling that includes sporting events.

Findlaw | Daily Fantasy Update: Idaho Says No, Tennessee Says Yes (Sort Of)

ESPN | Daily fantasy sports state-by-state tracker

Tax Increment Reinvestment Zones share revenue? Yes, some of the funds collected go toward a city-wide Municipal Services fee

What does the Municipal Services fee fund? Police bicycles like in Kingwood to pay for overtime

How much revenue did Kingwood’s Municipal Service fee generate?

• $490,000 total  Municipal Services fee revenue
•  HPD Kingwood receives $425,000 a year to cover overtime 
• Lake Patrol and Tac teams receive $65,000

Will the revenue in the Municipal Service Fee continue? Mayor Sylvester Turner has requested TIRZ to provide $240,000, any additional revenue contributions will require a vote by  the TIRZ board.

“The TIRZ money helps us to have more officers on the street; without the TIRZ money, it’s a regular day but these officers provide more manpower,” – HPD Kingwood Division Captain Mark Fougerousse

Kingwood Observer | New bike purchased for HPD Kingwood, extra funds provide more officers

Which midwestern state is sclaing back its open records laws? Missouri

Which records will no longer be subject to open records? 

• some police body camera footage
  • footage related to ongoing investigations
  • footage filmed in private homes, hospitals or schools
• some agricultural data
  • protect agricultural practices from competitors
• some criminal records

What’s the argument to seal off these records?

• protect citizens’ privacy
• encourage participation in :
  • programs that track livestock disease
  • provide equipment to police with body cameras

St. Louis Dispatch | Missouri Legislature scales back public access to records

Which pension system wants an A.G. Opinion: Jacksonvilel Florida’s Police & Fire Pension System

What did the city’s counsel do to the pension plan? The city attorney infromed the pension system that they couldn’t take a certain action–creating a senior staff voluntary retirement plan 

What will the state attorney general be asked to clarify? Who has final say over the legality of pension system actions

Florida Times Union | Pension fund board will seek opinion from attorney general

Which team is eyeing a new retractable roof stadium? The Rangers

Will it be a public-private financing arrangement? Yes. A 50/50 Cap with the local government contribution capped at $500 M.

What’s the next steps? 

• Approval by Arlington City Council on Tuesday, May 24, 2016.
• November 2016 approval by voters

ESPN | Rangers to build $1B stadium with retractable roof, to open in 2021

Ft. Worth Star Telegram | Rangers could play in new, air-conditioned ballpark in 2021 season

The State: Pennsylvania

The Vetoed Pension Reforms: The veto was only one down fall to 2015 pension reforms in Pennsylvania. The 2nd downfall for pension reform in 2015, was the demise of a state budget package.

What’s the 2016 pension reform? Stacked Hybrid Plan

What’s a Stacked Hybrid Pension?

• Applies to all new employees- state employees & public school teachers
  • baseline pension
  • traditional formula of years of service x 2% of final average salary
  • converts to a (401)k-style plan for any income earned over $50,000-per-year, & for all income after 25 years of service
  • For new enrollees, the the 401(k) threshold income would be adjusted up by 1%
  • 7% employee contribution
  • 4% state contribution on compensation above the 401(k) income threshold
• No impact to current employees or teachers

What’s the saving to the state with this pension reform plan? $10 billion over 30 years

Pennsylvania HB 1499
Penn Live | Public employee pension reform gets a fresh look in Pennsylvania

Reading Eagle | State House panel moves forward on pension bill

• CO & WA tax revenues from marijuana exceeded estimates
• States are considering lowering 30% marijunana tax rates which did not stop a blackmarket
• Tax rates are ranging from 10-25%
• Most workable method to tax marijuana: final retail sales tax
• Medical marijuana is more loosely taxed and more loosely regulated
• Tax generation has a lag time with a new tax system
• The taxation of marijuana also requires addressing health, agricultural, zoning, local enforcement, and criminal penalty issues

Tax Foundation | Marijuana Legalization and Taxes: Lessons for Other States from Colorado and Washington

• A  12,000 seat high school stadium draws a lot of attention 
• The largest approved bond package was $290 Million for Galena Park ISD
• 26 bond measures defeated
• 82 approved
• 76% bond passage rate throughout Texas

It’s done: McKinney residents vote for new stadium, one of the priciest in the state | Dallas Morning News 

12,000-seat high school stadium going forward in North Texas | News OK

Texas school district will get $62.8 million stadium for football and soccer | NY Daily News

That’s Right, $63 Million for a Football Stadium … for High Schoolers | NY Times

The Week in Politics: A $50 Million High School Stadium, an Assault Victim’s Victory and More | Governing

Texas Transparency | Bond Election Results

John Elliott of Austin

• A partner at Smith, Robertson, Elliott & Douglas, L.L.P
• Bachelor of Business Administration in accounting and a Juris Doctor from The University of Texas at Austin

Greg Gibson of Schertz

• Superintendent of Schertz-Cibolo-Universal City Independent School District
• Bachelor of Science and Master of Arts in education from Midwestern State University and a Doctor of Education from the University of North Texas

Christopher Moss of Lufkin (a re-appointment)

• President of Allendale, Inc. DBA The Advanced Financial Group
• Angelina County Fair board member & committee member of Angelina County Go Texan
• Bachelor of Science from Texas A&M University and a Master of Business Administration from Sam Houston State University

Governor Abbott | Governor Abbott Appoints Three To Teacher Retirement System Of Texas Board Of Trustees

Which state has a May 17, 2016 constitutional proposition to reform the state pension systems? Arizona

What’s the PRO argument? police, fire fighters & politicians agree that the refoms will preserve the financially challenged pension system for Arizona’s first responders

What’s the CON argument? Short term costs. Due to a pending Arizona Supreme Court case about 2011 pension reforms, the proposition could cost Arizona an additional $91.4 million in fiscal 2018 according to the Arizona Joint Legislative Budget Committee

AZ Central | Will fixes proposed in Proposition 124 save pension plan money?

Which taxing entity is involved?  Montgomery County Emergency Services District #11

What Emergency Services District  actions were a catalyst for this A.G. Opinion? ESD #11 wanted to raise its sales and use tax rate by 1/2%

Did the ESD #11 tax election take into account tax caps? 

• Yes, it excluded the towns of Splendora and Patton Village 
• However, it did not exclude areas in which East Montgomery County Improvement District (“EMCID”), Economic Development Zone No. 4 (“EDZ #4”) already maxxed out the cap

Can this be fixed post election? No, there is no statutory mechanism to fix this taxing oops

What statutory fix would fix this problem? 

• The Comptroller needs specific statutory authority to selectively collect sales and use tax

• Special districts also need statutory authority to unilaterally and retroactively withdraw its right to collect sales and use tax 

KP-0084

What kind of governmental approval does the Bi-National Economic Development Zone need?

• Federal Approval of the Zone
• State support of the Zone

What is the purpose of the Bi-National Economic Development Zone?

• Support design, engineering and advanced manufacturing
• Win back manufacturing jobs lost to Mexico

7 Proposals for the Bi-National Economic Development Zone:

1)  Create a governing Coordinating Board for the Rio South Texas Bi-NED Mega Region.
2)  Develop a single economic development plan
3)  Parallel the Zone proposed for the Mexican side of the border
4)  Integrated International Metropolitan Statistical Area
5)  Alternative L-1 Visa Program. 
6)  Joint U.S.-Mexico Built Certification. 
7)  Border Free-Trade Corridor Designation. 

Rio Grande Guardian | KROLL PROVIDES STRATEGY FOR RIO SOUTH TEXAS BI-NED MEGA REGION

Concerns about the Longview Firemen’s Relief & Retirement Fund are:

• $67 Million in unfunded liabilities
• Increasing city contributions by 1% equals but is only available by cutting some part of the 40% of the budget that is not public safety funding

What reforms have been initiated for the Longview Firemen’s Relief & Retirement Fund?

• City will increase contribution rates by 1%
• If the city cannot meet a 1% increase, the firemen support a 1/2% increase over a lapse in increased contriobutions
• Expanded benefit calculations from the last 3 years of service to a calculation based on the last 5 years of service
• Members of the fund voted to pay into benefits for their widows or widowers (previously a free benefit)

Longview News Journal | Budget woes could hit Longview firefighter pension

Which state governor signed into law new fantasy sports laws? Tennessee

What is this new tax on fantasy sports? 6%  privilege tax on all adjusted revenues of fantasy sports contests offered by a fantasy sports operator to Tennessee consumers

Where is the regulation within Tennessee state government? The Tennessee Secretary of State

What will be required of fantasy sports operators?

• Application to the Tennessee Secretary of State
• Receive a license
• Maintain records of all Tennesee players for at least 5 years
• Annual reporting
• Fees- licensing, renewal, operational fees- all will be set by the TN Secretary of State
• A violation triggers the TN Deceptive Trade Act (read: the state can impose big fines)
• No minors betting
• No betting on sports involving minors, including college if the participants are predominantly minors

Tennessee Senate Bill 2109

PR news Wire | Ryan Co. | Tennessee Enacts Fantasy Sports Bill, Privilege Tax

Which Texans are involved in funding a Philadelphia resolution to pass a soda tax? Laura and John Arnold are backing Philadelphians for a Fair Future which supports the new tax

How are the soda tax opponents framing their argument? Philadelphians Against the Grocery Tax. Its not about soda but about incresing the cost at the grocery store

How are the soda tax supporters framing their argument? This will fund pre-K education for Philadelphia’s children. Revenue from this tax is marked for pre-K funding and parks

Philly.com | Want political chips with your soda tax?
 

Which state frames its economic development funding as innovation funding? Hawaii

What part of the Hawaii economy do Hawaii’s economic development programs target? the innovation economy

What are examples of businesses in the innovation economy?

• Startup Paradise community, a diverse private sector group of local entrepreneurs, investors and businesses

How does innovation funding help the existing businesses and economy in Hawaii?​

• Supports the creation of high wage jobs
• Supports the rapidly evolving digital age
• Provide resources that our local entrepreneurs need to start & grow businesses 

Governor of the State of Hawaii David Y. Ige | DBEDT NEWS RELEASE: 2016 LEGISLATURE APPROVES FUNDING IN SUPPORT OF STATE INNOVATION INITIATIVES

Which state enacted new fantasy sports regulations? Colorado

What were the arguments for regulations:

• reasonable regulation
• preserve the popular games
• fair playing
• No minors
• No illegal betting

Highlights of the new fantasy sports regulations in Colorado:

• Operators of fantasy sports would have to:
  • have background checks
  • contract annual independent audits
  • maintain records of daily operations for at least 3 years
  • Register with the newly created Office of Fantasy Contests within the Colorado Department of Regulatory Agencies

Colorado’s House Bill 1404

Denver Post | Colorado legislature puts rules on pay-for-play fantasy sports leagues

A Texas Association of Business Op-Ed in the San Antonio Express News offers 4 arguments to support local control over pension plans:

• The state is blocking local control
• The state is blocking local reforms to control pensions
• The state should make it easier for local governments to reform their own pension plans
• Its the state that is impacting local bond ratings because of state control over local pensions

By example, the City of Houston & the Houston Firefighters’ Relief & Retirement Fund:

• Could be enjoying financial benefits from their agreed to refroms
• But,  failure to get legislative approval in 2015 is causing financial implications

Gary Gibson | Texas Association of Business Op-Ed | San Antonio Express News | Local control best for city pension plans

TPPF is working its way through the state budget’s articles identifying trends. Up this week- Article 3:

• Article 3 is up 59% while population + inflation was only up 555 since 2004-2005
• Article 3 general revenue spending is up 65% since 2004-2005
• Top 3 item increases in Article 3 for 2016-2017 are:
  • 34.8% increase for Higher Education Coordinating Board
  • 28.0% increase at Available Univeristy Fund
  • 25.4% increase for group insurance and retirement
• The 2016-2017 Article 3 budget is below population growth plus inflation 
   

TPPF Spotlight | TEXAS BUDGET TRENDS IN ARTICLE III 

Tyler Morning Telegraph editorial offers 2 recommendations for proeprty tax reform:

• More rollback elections
• Eliminate the property tax and replace it with an increased sales tax

Tyler Morning Telegraph | Property tax reform should be a priority

Who sued whom & why? Online retailers are suing South Dakota for imposing an online sales tax.

How are online sales currently taxed? To trigger a sales tax, the retailer must have a physical presence in the state

How could this South Dakota online sales lawsuit impact Texas? The U.S. Supreme Court is widely expected to take up this case and decide whether a physical precense is required to trigger a local and state sales tax.

Governing | In South Dakota, a Test Case for Online Sales Taxes

Your informed intel:

What’s the issue property tax lenders are figthing in court? Whether property tax loans trigger federal lending laws

What court recently ruled that property tax lenders do NOT trigger federal lending laws? 5th Court of Appeals in New orleans said  tax-lien transfers (property tax lenders) are not extensions of “credit” that trigger federal lending laws

Why does this matter in Texas? 

• 4 different Texas courts ended up with 4 different answers on the issue
• Arguments against property tax lending paint the industry as high interest loans that “trap borrowers in a cycle of debt” which echoes arguments made about the pay day lending industry.

San Antonio Express News | Property-tax lenders win appeal 

Which state Governor called for higher caps on property tax rates? Kansas

What was the imputus for the Kansas Governor to call for higher tax caps because of straining local property tax system? 

• Kansas has the highest commercial property taxes in the nation
• Tax abatements
• Lower revenue sharing from the state to local governments

What does the new tax cap consist of?

• Mandatory elections to approve a rate increase if it exceeds the rate of inflation
• Exemptions include:
  • construction of new buildings, improvements or renovation of existing structures
  • increases in personal property valuations
  • court judgments and settlements of legal actions
  •  federal mandates
  • expiration of property tax abatements
  • expenses related to disasters.

Topeka Capital Journal | Legislature prepares for votes on city, county property tax lid

Kansas HB 2088

The Informed Intel about well run pensions:

• 90% funding levels
• modest, well controlled benefits
• cost study requirements before a benefit enhancement can be made

GOVERNING | Pension Envy: Lessons From Well-Managed Plans

Someone tried to remove a Tea Party local governmental official because they voted not to fund their own entity? Yes. A guy who won a seat on the Somervell County Hospital District Board and voted to set the hospital tax rate to 0%.

What did the court say? The Tea Party is safe. It is not incompentency to vote to not fund the governmental agency upon which you serve.

What law was involved? Its believed to be the 1st time Anti-SLAPP statute was used against the government. The Hospital Board official has 1st amendment rights to hold his own opinions, including a 0% tax rate.

Which court made this ruling?  Waco’s Tenth Court of Appeals in Harper v. Best

Texas Lawyer | Appellate Court Rules Texas Official Can’t Be Removed for Anti-Tax Stance

• Art. 2 Largest Article. For the first time, Art 2 was the largest budget item for 2014-2015.
• Growth Exceeds Inflation + Population. Article 2 is up 76% while inflation and population grew at 55%
  • HHSC Budget was up 16.6% for 2016-2017
  • DAFPS was up 14.9% for 2016-2017
  • DSHS, DAFS, and DADS were all down for 2016-2017
    • DADS budget was down -36.3% for 2016-2017
• 2017 Supplmental Appropriations Bill of $1.4 billion would make Art 2 the largest article in the state budget for the 2nd biennium.

TPPF | SPOTLIGHT: TEXAS BUDGET TRENDS IN ARTICLE II

Utah, home to the Great Salt Lake, and held out as an example of Rainy Day Fund Policy.

Rainy Day Fund lessons from the west:

• Stress Test. The Utah Legislature’s budget staff put the state’s finances to a fiscal stress test
  • This let budget writers know forecasted spending and revenue under conditions of severe economic stress
• Stress Test Lesson 1. Rainy Day Fund is large enough.
• Stress Test Lessonn 2. legislators began talking about  “proactive budget adjustment” when talking about how spending may impact stress test results
• Stress Test Lesson 3.  Rainy Day Funds can “stabilize the often volatile politics of state budgeting”

Governing | The Great Recession’s Lessons on Rainy Day Funds

• Goldilocks Quagmire. Rainy Day Funds shouldn’t be too large or too small.
• Microeconomics. Each state has its “own optimal rainy day fund amount;” there is no national standard for Rainy Day Funds
• Platitudes Fail. “5 to 8 percent of annual spending” rule do not work
• Save,save,save. Most states do not save enough. Caps on Rainy Day Funds should cover  typical recession-led drops in revenues.
• Spending. Rainy Day Fund policies must also take into account  state spending policies.

Governing | The Great Recession’s Lessons on Rainy Day Funds

Which state has a pension reform measure on its constitutional amendment ballot? Arizona’s Prop. 124

Who supports Prop. 124? 

• Police and firefighter organizations
• League of Arizona Cities and Towns
• State Legislature
• Arizona Governor Doug Ducey
• Mayor of Prescott

What does Prop. 124 do?

• COLA Change. Switches the current 4% COLA to an increase capped at 2% and tied to the Consumer Price Index
• Save Taxpayers  $1.5 billion over the next 30 years.
• Keeps the promises made to police officers and firefighters
• Allows for statutory changes for new hires. Arizona SB 1428

  • Choice between a defined contribution plan or a defined benefit hybrid plan.

  • Changes age eligibility requirements from 52.5 to 55 years of age

  • Reduces the maximum pay for pension calculations from $265,000 to $110,000/year

  • Requires employees to split retirement costs 50/50 with the employer.

  • Reduces or eliminates COLAs if a pension plan falls below a 90% funded ratio.

Prescott Daily Courier | Column: Pension reform needs a ‘yes’ vote on Prop 124

Prescott Daily Courier | Prop 124: Pension fix has broad support

Which state is top in new data centers? Texas

Do data centers represent a lot of jobs? No, they are low staff facilities

How are data centers lucrative tax bases? Millions of dollars of taxable property, even after tax abatements.

• Let’s Look: Tarrant County & Ft Worth’s economic devleopment deal with Facebook:
  • $$146.7 million in tax abatements for up to 20 year
  • Estimated tax revenue:  $228.5 million in additional property taxes

New York Times | Texas Lures Data Centers, Not for Jobs but for Revenue

Which paper ran an editorial about corporate welfare? Corpus Christi Caller Times

What economic development deal triggered this editorial? An economic development deal between the State of Texas and Chevron.

What did the Chevron economic development deal look like?

• Texas offers up $12 Million in economic incentives from the Texas Enterprise Fund
• Chevron promises to build a 50 story, $662 million building in Houston
• Chevron promises to create 1,752 high wage jobs

Was the office bulding built & the high wage jobs created? No, 1,500 were laid off from Chevron

Did Chevron face a clawback? No, the editorial says the building construction and high wage jobs wer enot included in the economic development contract.

Corpus Christi Caller Times | A Texas-style corporate welfare case

Konni Burton & Empower Texas applaud Chair Nelson & Lt. Gov. Patrick call for zero based budgeting.

Empower Texas | Texas Senate Leads on Fiscal Responsibility

• Evidence says private retirement planning via 401Ks aren’t working
• In 1991, West Virginia moved to 401Ks & 14 years later the retirement system was funded at 25%. The state repealed the move away from defined benefit contributions.
• In 2005, Alaska switched new employees to 401Ks due to budget woes of $5.7 billion. Today, the budget woes are steeper at $6.7 billion.
• San Antonio Fire & Police Pension is a prime example of a healthy pension that has kept San Antonio’s AAA bond rating in tact.

Houston Chronicle | Patterson: Retain defined benefits for Houston’s public employees

TPPF highlights these trends in Article I budgeting:

What divestment triggered a rethinking of the divestment? Tobacco divestment by CALPERS

When did CALPERS Divest from tobacco? 2001

Why the tobacco divestment? CALPERS has a social responsibility to not invest in cancer causing products

Why the change of heart? A study showed CALPERS left $3BILLION off the table by divesting

Governing | The Week in Public Finance: CalPERS’ Rethinks Tobacco Divestment, Fact-Checking Illinois’ Exodus and Income Recoveries

The LBB made these points to the Appropriations Committee about ERS 2016-2017 appropriations, House Bill 9, and cost of living adjustments? 

• ERS state contribution rate for 2016-2017 is 9.5% per year
• ERS state + agency contribution rate for 2016-2017 is 10%, the Constitutional maximum
• ERS member contribution rate for 2016-2017 is 9.5%
• In 2013, the state & member contribution rate to ERS was 6.5%

How were the changes to ERS made?

• Appropriations within HB 1 and HB 9

What statutory changes did HB 9 require?

• Increases ERS member contribution rate
• Lowers ERS membr contribution rates, if the state contributes less than 9.5%
• The increase ERS member contribution is offset, with salary increases in HB 1
• Eliminates 90 day waiting period for ERS Retirement

What were the goals fo the changes to ERS Retirement?

• Improve the infinite funding period to 32 years
• Improve the actuarial sound contribution rate to 19.57%

What’s improved in ERS so far?

• As of 8/31/2015, the funding period is 33 years
• As of 8/31/2015, the actuarial sound contribution rate is 19.62%

LBB | ERS Retirement Program April 2016

Which state Insurance Department can issue advisory opinions about what salaries count toward pensions? Illinois

What did the State Insurance Department Advisory Opinion do? Contradicting a 1998 opinion, the agency voted to prohibit the use of holiday or double time pay toward pensions for all new hired

How did the Fire Pension in Springfiled react? By continuing the practice, sparking the threat of lawsuit by the City

State Journal Register | City threatening legal action over firefighter pension issue